Question
Puleva S.A. of Madrid Spain, manufactures and sells 2 products of luxury finished cutlery - Alvaro and Bazan. Current monthly sales and cost information is
Puleva S.A. of Madrid Spain, manufactures and sells 2 products of luxury finished cutlery - Alvaro and Bazan. Current monthly sales and cost information is provided below for each case: Alvaro Bazan Selling price per unit $400 $600 Variable expenses per unit 240 120 Number of cases sold 200 80 Fixed expenses are $66,000 per month. Required: 1. Based on the current sales mix, compute the break-even point of the company, and determine the current margin of safety. Also, create a contribution income statement in terms of dollars and Contribution margin percentage for each product and the total company sales. 2. The company has just introduced a new product, Cano, that the company plans to sell for $800 per case. The variable cost of production is expected to be $600, and expectations are for sales of 40 cases per month. The fixed expenses are not expected to increase. Compute the company's new break-even point as a whole and create a new contribution margin income statement for each product and the total company sales. 3. Explain (briefly) to the CEO why the break-even point has changed, despite no change in fixed expenses for the company and the addition of new product which has increased total contribution margin. Using Excel tog get the answer - please show the any equations used.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started